Philippine economic growth missed analysts’ estimates last quarter even as state spending increased, with a government official saying the expansion target for this year will likely be cut.

Gross domestic product increased 5.6 per cent in the three months through June from a year earlier, the Philippine Statistics Authority said Thursday. That compares with a median estimate of 5.7 per cent in a Bloomberg survey, and a 5 per cent pace in the first quarter.

External risks make meeting this year’s growth target of at least 7 per cent “very much a challenge,” Economic Planning Secretary Arsenio Balisacan said today. Still, a consumption-based economy and steady dollar inflows insulate the country more than other emerging nations from the yuan’s devaluation and US interest-rate increases, Jay Peiris, the International Monetary Fund’s representative in Manila, said last week.

“The government stepped up spending and private consumption also remains fairly strong,” Gundy Cahyadi, Singapore-based economist at DBS Group Holdings Ltd, said before the report. “There’s going to be some negative growth impact from financial-market volatility, but fundamentals are way more important at this point.”

Government spending climbed 3.9 per cent in the second quarter from a year earlier, and consumer spending gained 6.2 per cent. That helped counter weakening exports, which fell every month in the second quarter.

“The second-quarter GDP growth shows the expanse of the country’s resiliency from the prevailing weakness of the global economy,” Balisacan told a briefing. The significant improvement in government spending “gives us more confidence about the performance of the public sector in the coming quarters of the year.”

President Benigno Aquino, whose term ends in June 2016, had targeted growth of 7 to 8 per cent this year and next. The Philippine central bank kept the benchmark rate unchanged this month, and governor Amando Tetangco said this week that while private consumption will continue to be well supported, it is necessary to find other drivers of growth.

Philippine economic growth missed analysts’ estimates last quarter even as state spending increased, with a government official saying the expansion target for this year will likely be cut.

Gross domestic product increased 5.6 per cent in the three months through June from a year earlier, the Philippine Statistics Authority said Thursday. That compares with a median estimate of 5.7 per cent in a Bloomberg survey, and a 5 per cent pace in the first quarter.

External risks make meeting this year’s growth target of at least 7 per cent “very much a challenge,” Economic Planning Secretary Arsenio Balisacan said today. Still, a consumption-based economy and steady dollar inflows insulate the country more than other emerging nations from the yuan’s devaluation and US interest-rate increases, Jay Peiris, the International Monetary Fund’s representative in Manila, said last week.

“The government stepped up spending and private consumption also remains fairly strong,” Gundy Cahyadi, Singapore-based economist at DBS Group Holdings Ltd, said before the report. “There’s going to be some negative growth impact from financial-market volatility, but fundamentals are way more important at this point.”

Government spending climbed 3.9 per cent in the second quarter from a year earlier, and consumer spending gained 6.2 per cent. That helped counter weakening exports, which fell every month in the second quarter.

“The second-quarter GDP growth shows the expanse of the country’s resiliency from the prevailing weakness of the global economy,” Balisacan told a briefing. The significant improvement in government spending “gives us more confidence about the performance of the public sector in the coming quarters of the year.”

President Benigno Aquino, whose term ends in June 2016, had targeted growth of 7 to 8 per cent this year and next. The Philippine central bank kept the benchmark rate unchanged this month, and governor Amando Tetangco said this week that while private consumption will continue to be well supported, it is necessary to find other drivers of growth.